If an option is exercised “in the money,” the payoff can be significant. Options allow the holder to buy or sell the underlying index at a certain price at a certain time, which can rise or fall rapidly. But money could be going into more esoteric ones like the Hang Seng, Gold and Emerging Markets. This might include plain vanilla ones such as the S&P 500 and the Russell 500 indices. The cash value within an IUL policy is tied to an index. “They are complex products sold with false promises and deceptive marketing,” says Birny Birnbaum, executive director of the nonprofit Center for Economic Justice. Pacific Life is the biggest and holds about 19% of the market.īut critics say indexed universal life insurance is being sold dishonestly. There are now at least 52 insurers selling indexed universal life insurance, says Barry Flagg, president of Veralytic, a life insurance products rating service. New IUL premiums increased by 29% in the fourth quarter of 2021 alone, according to LIMRA, an industry-funded financial research company. For more than a decade, indexed universal life insurance (IUL) has been one of the life insurance industry’s most profitable businesses.
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